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Fairway 16 Heatherridge Association v. American Family Mutual Insurance Co.

United States District Court, D. Colorado

March 14, 2016



William J. Martínez United States District Judge

Plaintiff The Fairway 16 Heatherridge Association (“Fairway 16”) brings this action against Defendant American Family Mutual Insurance Company (“American Family”) for alleged breach of insurance contract, common law bad faith breach of insurance contract, and statutory bad faith breach of insurance contract. (See ECF No. 4.) Fairway 16, a condominium owners’ association, claims that its insurance policy with American Family obligates American Family to pay to repair hail damage allegedly incurred on the condominium roofs in September 2013. (Id.)

Currently before the Court is American Family’s Motion for Partial Summary Judgment on Plaintiff’s Bad Faith and Statutory Claims. (ECF No. 46.) For the reasons explained below, this motion is denied.


Summary judgment is warranted under Federal Rule of Civil Procedure 56 “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). A fact is “material” if, under the relevant substantive law, it is essential to proper disposition of the claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). An issue is “genuine” if the evidence is such that it might lead a reasonable trier of fact to return a verdict for the nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997).

In analyzing a motion for summary judgment, a court must view the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). In addition, the Court must resolve factual ambiguities against the moving party, thus favoring the right to a trial. See Houston v. Nat’l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir. 1987).


The following facts are undisputed unless otherwise noted.

In September 2013, the Fairway 16 condominium complex was insured by American Family against certain forms of property damage. (ECF No. 46 at 2-3, ¶¶ 1-3; ECF No. 46-1.)[1] Fairway 16 claims that many or all of its buildings sustained hail damage from a storm on September 14, 2013. (Id. ¶ 2.)

Fairway 16 reported this claim to American Family in December 2013. (Id. at 3, ¶ 3.)[2] American Family then retained a licensed engineer, Bruno Lutz, P.E. (“Lutz”), to inspect the Fairway 16 property, particularly the roofs. (Id. ¶ 6.) Lutz inspected the property in January 2014 and submitted his written report to American Family on February 5, 2014 (“Lutz Report”). (Id.; ECF No. 46-11.)

The Court will discuss the details of the Lutz Report as they become relevant in the Analysis section below. For present purposes, it suffices to state that Lutz noted definite signs of hail damage to fencing, vinyl window trim, window screens, roof vents, siding, satellite dishes, and fascia boards. (ECF No. 46-11 at 3-6.) However, he believed that the roofs themselves manifested mostly age-related deterioration and some “damage that is consistent with older, weathered hail impact.” (Id. at 6.) Lutz judged the age of these potential impacts based on the “graying” and “whiteness” of the exposed asphalt layer (i.e., the asphalt beneath the granular surface, which surface had potentially been stripped away by a hail strike). In other words, Lutz appears to be saying that the bleaching of the exposed asphalt suggests more sun exposure than would be expected if the hail damage had happened recently. He ultimately concluded that “the roofs have not been damaged as the result of hail impact occurring since April 2012.” (Id. at 11.) The April 2012 date is relevant because that is when American Family began insuring the Fairway 16 property. (Id. at 2.)

American Family sent the Lutz Report to Fairway 16 on February 7, 2014, and informed Fairway 16 that its claim was denied. (ECF No. 46 at 4, ¶ 7.) Fairway 16 then engaged a different engineer, Ryan Hardesty, P.E. (“Hardesty”), for a second opinion. (Id. at 5, ¶ 11.) Hardesty inspected the property on February 13, 2014, and then produced a report dated March 9, 2014 (“Hardesty Report”). (See ECF No. 46-12 at 2, 9.) Hardesty mostly disagreed with Lutz’s reasoning. He concluded that the hail damage on the roofs occurred “potentially on September 14, 2013.” (Id. at 8.) At his deposition in this case, Hardesty admitted that he chose the adverb potentially because “[t]here’s no way to know” with certainty that hail damage observed on February 7, 2014, took place on September 14, 2013. (ECF No. 48-2 at 7.) “But, ” he said, “my belief was that it was potentially/most probably on that date.” (Id. at 8.)

Sometime before this lawsuit was filed-no party specifies precisely when- Fairway 16 transmitted the Hardesty Report to American Family. (See ECF No. 46 at 8.) In addition, on April 15, 2014, Fairway 16 transmitted to American Family a localized weather report prepared by a third-party meteorology firm. (ECF No. 47 at 6, ΒΆ 5; ECF No. 47-3.) This report relied on historical weather data to conclude that, in the late afternoon of September 14, 2013, the Fairway 16 property experienced a 16-minute hailstorm with maximum winds of about 29 mph and hail ranging in size from 0.5 inches to 1.5 inches in ...

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